Hunting for Hot Spots When You’re Buying Real Estate

Finding the perfect home means different things for different people. People who are thinking about raising a family, for example, might want a nice roomy house in a great neighborhood for kids to play. People who are more focused on appreciation, investment value and selling again in a few years, however, might be more focused on buying a home in an up-and-coming hot spot. If you’re hunting for a hot spot, here’s what you need to know about choosing the right community to shop for a home:

You Want Hot, but Not Too Hot

Most people who are trying to buy a home in a hot spot want someplace that’s going to appreciate nicely and return a better-than-average investment on a three- to five-year timeframe. If this sounds like you, you want to look for a neighborhood that’s trending hot, but isn’t too hot already. If you wait too long to buy in a “hot” community, you’ll pay top dollar for your home, and it will reduce your returns. Ideally, you want to buy in right as a community starts becoming “the hot spot” – when you’re certain the transition is on the way, but not so far along that prices have skyrocketed.

Look at Historical Data

One way you can accurately calculate where a community is in the process of becoming a “hot spot” is to look at historical data for the area. Look for things like:

Have home sales increased in volume?

Have prices gone up?

Have they added jobs to the local economy?

Has the local average median wage gone up?

Are there new businesses coming into the area?

Are there many building permits on file for new construction or renovations to existing properties?

All of these factors are signs that the area is booming, so this data can give you a good idea of whether you’re buying into a “hot spot.”

Factor in Whether It’s Someplace You’ll Want to Live

Don’t forget to think about whether or not it’s even someplace you’ll want to live! Do you like the area now? How about in a few years when the area is booming? If you’ve got a mid-range timeframe to move in five or more years, you’ll want to find out about what’s in store for the area and think about whether it’s someplace you’ll enjoy. There’s no point in buying in a hot spot if you decide you can’t stand it, and move too quickly to realize a profit when you sell.